For some investors, no quarterly event holds more significance than earnings season -- the six-week period where a majority of the stock market's most-influential businesses unveil their operating results. But a strong argument can be made that Form 13F-filing season is just as important.
A 13F is a required filing no later than 45 calendar days following the end to a quarter for institutional investors with at least $100 million in assets under management. This filing allows investors to see which stocks Wall Street's genius money managers have been buying and selling.
Though there's no shortage of successful asset managers to track on Wall Street, none garners investor attention quite like billionaire Warren Buffett, who's been holding the reins as CEO of Berkshire Hathaway (BRK.A -1.27%) (BRK.B 0.18%) for the last 60 years. Buffett, who's set to retire from the CEO role at the end of this year, has overseen a cumulative gain in Berkshire's Class A shares (BRK.A) of better than 5,868,000%, as of the closing bell on July 25.
When you average a nearly 20% annualized return over six decades, you're bound to draw a crowd.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Since October 2022, the aptly dubbed Oracle of Omaha has been a decisive net-seller of equities, with $174.4 billion more in stocks sold than purchased. One of Berkshire's core investment holdings, Bank of America (BAC -3.50%), makes up a notable chunk of this selling activity.
However, Buffett is finding select pockets of intrigue, too, as evidenced by the industry-leading stock he's purchased for three consecutive quarters (through March 2025).
Warren Buffett dumped over 401 million shares of BofA from Berkshire's portfolio
Though Berkshire Hathaway's billionaire chief has been an active seller for more than two years, it's his paring of Bank of America stock, a longtime core holding, which is truly eye-opening.
On July 17, 2024 -- we know this precise date since Berkshire is required to file Form 4 within two businesses days following any transactions when it holds at least a 10% stake in a public company -- Buffett began pressing the sell button. Over a nine-month period, ended March 31, the Oracle of Omaha dumped more than 401 million shares of Bank of America stock, or roughly 39% of a position that once totaled north of 1.03 billion shares.
Profit-taking may very well explain Buffett's aggressive selling activity in BofA. During Berkshire Hathaway's annual meeting in May 2024, he intimated that the peak marginal corporate income tax rate was likely to climb in the future. Though this opinion was used to justify selling activity in top holding Apple, it would certainly make sense for Bank of America, as well, where Berkshire is sitting on a sizable unrealized gain.
However, Wall Street's most-followed billionaire investor may be a seller of BofA stock for reasons other than just benign profit-taking.
If there's a sector Warren Buffett has a bead on better than any other, it's financials. While Buffett fully appreciates the nonlinearity of economic cycles and the ability of banks to take advantage of disproportionately long periods of economic growth, he's not oblivious to the impact Federal Reserve monetary policy can have on banks.
Among Wall Street's largest banks by total assets, none is more sensitive to changes in interest rates than Bank of America. When the Fed was combating the biggest surge in the prevailing rate of inflation in four decades between March 2022 and July 2023, no big bank benefited more from an increase in interest rates than BofA. Conversely, with the nation's central bank now in an easing cycle, falling rates could threaten BofA's net interest income more than any other big bank.
Additionally, Warren Buffett is an absolute stickler when it comes to value. No matter how much he appreciates a company's management team, capital-return program, or competitive advantages, he won't buy or hold shares of any company he doesn't view as a good deal.
When Berkshire first took a stake in BofA in August 2011 via preferred stock, Bank of America's common stock was valued at a 62% discount to its book value. As of the closing bell on July 25, BofA stock was valued at a 31% premium to book. The price dislocation that Buffett salivated over doesn't exist anymore.
Image source: Getty Images.
Berkshire's billionaire chief has purchased this outperformer for three straight quarters
On the other end of the spectrum, Berkshire Hathaway's CEO has done some very selective buying. While most investors have focused on his continued purchases of satellite-radio operator Sirius XM Holdings and fast-food restaurant chain Domino's Pizza, arguably the strongest long-term outperformer on Buffett's buy list is Pool Corp. (POOL 0.17%).
Since its initial public offering (IPO) in October 1995, shares of this pool supplies and related equipment distributor have gained more than 35,000%. But tack on dividends paid, and this total return expands to nearly 48,000% in less than 30 years. Buffett has purchased shares of Pool for three consecutive quarters, with Berkshire's total stake now up to 1,464,000 shares.
One reason for Buffett to be optimistic about Pool's future is its cyclical ties. Though slowdowns in new home construction and/or a weaker economy can slow demand for new pool construction, the U.S. economy spends a disproportionate amount of time expanding than contracting. For a money manager like Buffett, who tends to make investments for multiple years, if not decades, timing his entrance into Pool stock isn't a big deal.
Something else that likely piqued the attention of Berkshire's lead investor is the razor-and-blade-style operating model at Pool's core. The overwhelming majority of its net sales derive from recurring streams, such as products to maintain or repair existing pools. Demand for ongoing maintenance from homeowners or pool technicians makes the company's sales and operating cash flow highly predictable.
Pool Corp. is also thinking outside the box with its investments in digitization. Pool360 is the company's software platform for pool and spa professional that assists with scheduling, billing, and inventory management, among other tasks. Software typically sports higher margins than retail operations, which means Pool's margins can climb as Pool360 becomes a larger component of overall sales. Over the last two years, ended June 30, Pool360 has climbed from north of 12% of net sales to more than 16% of net revenue.
The final piece of the puzzle that's likely been enticing the Oracle of Omaha is Pool's hearty capital-return program. Pool is spending almost 10 times as much on cumulative share repurchases and dividends to its shareholders as it is on capital expenditures. Buffett tends to be a huge fan of share buybacks since they incent long-term investing.
If there's one knock against Pool, it's that the company isn't exactly cheap. It's valued at nearly 28 times forward-year earnings and roughly 25 times consensus cash flow for 2026. Both of these figures are slightly above average over the trailing half-decade, which suggests Buffett's buying activity in Pool may not extend to a fourth straight quarter.
